ConocoPhillips eyes wider margins

Oil major's a beneficiary of higher oil and gas prices

By

SteveGelsi

NEW YORK (MarketWatch) -- Higher prices for crude oil and natural gas will boost ConocoPhillips' second-quarter profit margins, the company said Tuesday along with reiterating its expectation that worldwide production will fall.

The Houston-based company
COP, -1.92%
in its interim update on just-completed quarter, also disclosed it expects stock repurchases to have totaled about $1 billion during the three months ended June 30.

During the June quarter, oil sold for about $68.76 a barrel, compared to $57.76 in the first quarter and up from $69.62 in the year-ago period, reflecting how the No. 3 U.S. oil company's core exploration-and-production unit will benefit from rising commodity prices.

As disclosed earlier, the company said second-quarter production, on a barrel-of-oil-equivalent daily basis, is anticipated to be lower than the previous quarter primarily due to maintenance in the North Sea, the company's exit from Dubai, asset disposals and seasonality factors in Alaska.

Exploration expenses are expected to be about $270 million on a pre-tax basis for the quarter.

As disclosed on June 26, the company expects to record a complete impairment of its entire interest in its oil projects in Venezuela of approximately $4.5 billion, both before and after taxes, in the quarter. See related story.

ConocoPhillips also said it expects "significantly higher" worldwide margins in refining and marketing, with refining capacity and utilization rate pegged as "similar" to the first quarter.

The company expects results to be higher than the previous quarter in its midstream unit, but lower in its chemicals business.

The company's debt balance will weigh in at about $22.8 billion, with a net benefit seen via its asset-disposition program.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.